Far East Capital Newsletter
Coal looks like a profitable dark horse again
24 Jun 2018

In This Issue

Coal looks like a profitable dark horse again

Notwithstanding the environmental push against coal and leading institutions around the world black-banning investment in the sector, it seems that there is still plenty of money to be made. Ironically, it is the rejection of new coal projects by investors and governments around the world that is underwriting what looks like a very profitable period coming up. Future supply growth is under siege so the lack of supply response will keep prices high. Irrespective of what the greenies want, coal is going to be an essential commodity for many decades to come. That was the opinion of a panel of speakers at the Energy Mines and Money Conference in Brisbane last week.

The Monash Forum has released a Fact Sheet stating that there are 467 coal fired power stations under construction and another 903 planned. Australia is out of step with the 50 countries that are part of this program. Why is it that Australia is shutting down its coal fired power stations? Is Australia the only country that has got it right? Hardly. As investors we must be sure not to be carried away with the anti-coal crusaders, because if we are, we will miss what continues to be a very promising sector in which to invest. Of all cyclical sectors coal is the one that offers the most extreme swings, going from extreme despair to euphoria. That means there are regular, very profitable trades to be made. 

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